Hostages still in danger in Algeria stand-off

The fate of foreign hostages held at a remote Algerian gas plant is hanging in the balance as their Islamist captors demand a prisoner swap and an end to French military action in Mali.

The Algerian state news agency says a military operation is still going at the plant, and about 30 foreigners remain unaccounted for, after Islamist militants launched a hostage-taking raid this week.

The Al Qaeda-linked gunmen, cited by Mauritania's ANI news agency, said they still held seven foreigners at the site deep in the Sahara desert near the border with Libya. An Algerian security official put their number at 10.

"This is an extremely difficult and dangerous situation," US secretary of state Hillary Clinton said in Washington at a joint news conference with an equally concerned Japanese foreign minister Fumio Kishida.

"The United States extends our condolences to all the families who have lost loved ones in this brutal assault and we remain deeply concerned about those who remain in danger. Utmost care must be taken to preserve innocent life."

The US State Department has since confirmed that one American died after militants stormed the plant.

French foreign minister Laurent Fabius said a Frenchman had also been killed in the operation.

A US official said an American military transport had begun to help evacuate survivors, but gave no estimate of the number of US hostages.

A security official said troops were trying to reach a "peaceful" end to the hostage crisis, before "neutralising the terrorist group that is holed up in the plant and freeing a group of hostages still being held there."

The kidnappers said they were still holding three Belgians, two Americans, one Japanese and a Briton, although Belgium said there was no indication any of its nationals were being held.

More workers remain unaccounted for, and the fate of at least 10 Japanese nationals and eight Norwegian hostages is still unknown.

Heavily armed

Algerian news agency APS quoted a government official as saying the kidnappers, who claimed to have come from Niger, were heavily armed with machineguns, assault rifles, rocket launchers and missiles.

The group, known as "Signatories in Blood", want an end to the French intervention in Mali and to exchange American hostages for US-held prisoners, according to ANI, who quoted sources close to the group's leader, Mokhtar Belmokhtar.

ANI said Belmokhtar, a veteran Algerian Islamist with Al Qaeda ties who has claimed responsibility for the attack, had proposed Paris and Algiers negotiate "an end to the war being waged by France in Azawad (northern Mali)".

He also proposed exchanging US hostages held by his group for Egyptian Omar Abdul Rahman and Pakistani Aafiah Siddiqui, jailed in the United States on charges of terrorist links.

"The United States does not negotiate with terrorists," State Department spokeswoman Victoria Nuland said when asked about the proposal.

Algeria has defended its handling of the crisis, with communications minister Mohamed Said saying special forces had been forced to act quickly in order to save lives.

"These foreigners are guests of Algeria. This is why in the end when the Army's command became certain it was the time, we had to act rapidly," he said.

"If we didn't move, they could kill the hostages, because they were determined. Their orders were not to retreat. This is why we had to move swiftly. As far as we can see now I consider that we avoided a real catastrophe, a real massacre."